By: Harris, et al. (Senate Sponsor - Perry) H.B. No. 5560          (In the Senate - Received from the House May 8, 2025;   May 9, 2025, read first time and referred to Committee on Water,   Agriculture and Rural Affairs; May 14, 2025, reported adversely,   with favorable Committee Substitute by the following vote:  Yeas 8,   Nays 0; May 14, 2025, sent to printer.)Click here to see the committee vote     COMMITTEE SUBSTITUTE FOR H.B. No. 5560 By:  Perry     A BILL TO BE ENTITLED   AN ACT     relating to penalties in certain suits involving a groundwater   conservation district; increasing a penalty.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 36.102, Water Code, is amended by   amending Subsection (b) and adding Subsections (b-1) and (f) to   read as follows:          (b)  Except as provided by Subsection (f), the [The] board by   rule may set reasonable civil penalties, including a range of   reasonable civil penalties, that the district may recover from   [against] any person for breach of any rule of the district in an   amount not to exceed $25,000 [$10,000] per day per violation, and   each day of a continuing violation constitutes a separate   violation.          (b-1)  In determining the amount of a civil penalty under   this section, the court shall consider:                (1)  the nature, circumstances, extent, duration, and   gravity of the violation, with special emphasis on the effect of the   violation on:                      (A)  groundwater resources;                       (B)  another person's right to produce   groundwater;                      (C)  public health and safety; or                      (D)  other water resources or the environment;                (2)  with respect to the alleged violator:                      (A)  the history and extent of previous   violations;                      (B)  the degree of culpability, including whether   the violation was attributable to mechanical or electrical failures   and whether the violation could have been reasonably anticipated   and avoided;                      (C)  the demonstrated good faith, including   actions taken by the alleged violator to rectify the cause of the   violation and to compensate the affected person;                      (D)  whether there was an economic benefit gained   as a result of the violation and, if so, the amount of the economic   benefit;                      (E)  the amount necessary to deter future   violations; and                       (F)  if the alleged violator is a person required   to adopt a drought contingency plan under Section 11.1272 and   overproduction of groundwater is the basis of the alleged   violation, whether the person acted in good faith and exercised   reasonable diligence in implementing and enforcing the terms of the   plan; and                (3)  any other matters that justice may require.          (f)  In an enforcement action brought by a district against a   person, the court may assess a penalty greater than the maximum   penalty authorized under Subsection (b) if the court determines   that the person gained an economic benefit as a result of the   violation that was greater than the maximum penalty under   Subsection (b).  A penalty assessed under this subsection must be in   an amount determined by the court to be necessary and appropriate to   outweigh the economic benefit gained by the person as a result of   the violation and discourage future violations.          SECTION 2.  Subchapter D, Chapter 36, Water Code, is amended   by adding Sections 36.1021 and 36.1022 to read as follows:          Sec. 36.1021.  DEFERRAL OF PENALTY. (a) A court by order may   allow a person to defer the payment of not more than 50 percent of   the total amount of the civil penalties awarded by the court to a   district for a violation under Section 36.102 on the condition that   the person complies with all provisions for corrective action to   address the violation.           (b)  A court order under Subsection (a) must require the   person to spend an amount of money equal to the amount of the civil   penalty deferred by the court to mitigate the consequences of a   violation of a rule of the district or prevent future violations of   a rule of the district.           (c)  In determining whether deferral of a civil penalty under   this section is appropriate and the amount, if any, to be deferred,   the court must consider:                 (1)  the factors used in determining the amount of the   civil penalty under Section 36.102(b-1);                (2)  whether the amount of the civil penalty that is not   deferred, when combined with the amount of any attorney's fees   awarded by the court to the district, will at a minimum cover the   costs and expenditures of the district in enforcing its rules   against the person so that the district will be made financially   whole;                 (3)  the financial position of the person and the   person's ability to reasonably pay the costs associated with the   corrective action under the terms of the court order;                (4)  any risks to groundwater resources, another   person's right to produce groundwater, public health and safety, or   other water resources or the environment that would result from a   delay in implementing the corrective action because of the person's   limited financial resources;                (5)  any alternatives reasonably available to the   person for the purpose of paying the penalty and any costs   associated with taking the corrective action; and                (6)  whether requiring the person to pay the civil   penalty will affect other essential public health and safety   services for which the person is responsible.          (d)  If the person seeking deferral of a civil penalty under   this section is a wholesale or retail public water system, the   corrective action for purposes of Subsection (a) may include   capital improvements that benefit the water system in which the   violation occurred, including securing additional sources of water   supply, addressing system water loss, or otherwise addressing water   conservation issues.          (e)  The court may require the person to pay the full amount   of the civil penalty under Section 36.102 if the court finds that   the person is not in compliance with a provision of the court order   issued under Subsection (a) of this section.          Sec. 36.1022.  RECOVERY OF CIVIL PENALTY BY WATER AND SEWER   UTILITY. (a)  A court that has assessed a civil penalty against a   water and sewer utility, as defined by Section 13.002, under   Section 36.102 for violation of a district rule limiting   groundwater production may authorize the utility to recover, in any   manner that is equitable and just, all or part of the civil penalty   from any customers or class of customers responsible for causing   the utility to violate the rule.           (b)  The court may allow the recovery of the civil penalty   only if the court finds that:                (1)  the utility acted in good faith and exercised   reasonable diligence in implementing and enforcing the terms of the   utility's drought contingency plan required by Section 11.1272; and                 (2)  the customers from whom the civil penalty will be   recovered continued to violate the provisions of the drought   contingency plan despite the utility's enforcement measures.          (c)  The utility may retain a civil penalty recovered under   this section unless the court directs the utility to use the money   for a specific purpose in the interests of justice.           (d)  A civil penalty recovered under this section is not a   rate as defined by Section 13.002 and may not be considered revenue   of the utility in a rate proceeding under Chapter 13.          SECTION 3.  Section 36.102, Water Code, as amended by this   Act, and Sections 36.1021 and 36.1022, Water Code, as added by this   Act, apply only to a suit involving a groundwater conservation   district that is filed on or after the effective date of this Act.  A   suit filed before the effective date of this Act is subject to the   law in effect on the date the suit is filed, and that law is   continued in effect for that purpose.          SECTION 4.  This Act takes effect September 1, 2025.     * * * * *